Global Summit — Meet Regional Crisis
CANNES– Greek Prime Minister George Papandreou was the inconvenient guest here at the G-20 summit, attending under unhappy circumstances for him as well as his counterparts. Typically, leaders of non-G20 countries would give their eye teeth for a chance to join such rarefied company. But then Papandreou wasn’t so much pulled into the festivities as called on the carpet. In fact, he had left Cannes for Athens before most of the leaders coming from beyond Europe had even arrived.
Papandreou’s out-of-the-blue plan to put Greek fiscal policy up for referendum upended both Greece’s recently announced agreement with Eurozone leaders and the G-20 summit agenda. Truth be told, Papandreou’s move — which meanwhile was withdrawn almost as suddenly as it was proposed — simply heightened a crisis that would have been awkward for G-20 leaders even without fresh uncertainty over Greece’s debt.
Job One of the G-20 is collective stewardship of the global economy, striving for strong growth of the world’s total GDP and stability in its financial system. The lingering uncertainties over the solvency of Eurozone problem children Greece and (principally) Italy pose threats at both levels. They could knock the financial system off its feet with a post-Lehman-like contagion. Or merely slip into renewed recession and drag everyone else down with them.
So whose problem is this any way, the Eurozone’s or the wider world’s? The solution really must come from the Europeans themselves, yet the stakes are high for all of us. At one level, this quandary aptly captures the interconnected times in which we live. From what I’ve heard in Cannes, though, the problem is also a distinctly practical one for diplomacy here at the summit. The leaders from non-Eurozone countries have been unsure of their standing or role regarding the crisis — unclear how or how much they should be discussing it. After all, the summit they thought they were coming to had a different and longer-term agenda: re-balancing between countries too dependent on exports or consumer demand, strengthening financial regulation, spreading development to less-developed nations, combating corruption, and food security.
In terms of the Euro crisis, they’ve probably mostly been wishing Germany would commit the resources for an adequate financial firewall around the Italian debt or that the European Central Bank would become more like the Fed and shift its role to become a lender of last resort.
Photo credit: Agencia Brazil